Detroit – — The City Council signed off Tuesday on a $453,520 contract that will put the daily collection of the city’s bus-fare revenue in the hands of a third-party vendor.
The one-year agreement reached between Emergency Manager Kevyn Orr and Total Armored Car comes after repeat audits and inspections by city officials uncovered a disorganized cash-counting operation within the Detroit Department of Transportation.
The contract allows the company to collect and count the cash from the city’s bus fleet. The move ends the current cash system, which involves employees counting bus-fare revenue each day at the DDOT central office on Warren Avenue.
The shift is part of Orr’s effort to overhaul city service operations while Detroit is in bankruptcy.
“We know how much money gets deposited. We also know there is a discrepancy between estimates on ridership and what revenues are,” Orr spokesman Bill Nowling said Tuesday. “This is going to clear that up. We don’t know one way or the other that there was X amount of dollars missing, but it’s a cash business, and when you have a cash business, it’s important to have all the protocols in place.”
The cash — an average of $1.2 million a month — will be transferred from the bus to a lock box and given to the armored car company, officials said.
Under the agreement, an existing contract Total Armored Car held with the city was amended from $47,520 to a payout of up to $453,520 for an expansion of services to include the bus fare collection.
Detroit’s Chief Operating Officer Gary Brown said the city’s main goal was to eliminate the potential for fraud and waste. In addition, the contract will save the city about $300,000, he said.
Two past city audits found that the DDOT money room lacked adequate written policies and procedures and control over fare box receipts. The later audit also recommended the department take steps to ensure compliance.
Brown told the council that while conducting an investigation of the current cash counting operation he observed bags of money on the floor and “strewn about.”
“Clearly this will eliminate most of the potential for fraud and waste,” he said.
The council received the contract from Orr on Friday. The panel had until Monday to approve or reject it.